Refusal of work

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  • Carmichael v. Southern Coal & Coke Company
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  • California Department of Human Resources Development v. Java
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• Unemployment insurance in the states
• Reform proposals related to unemployment insurance
• Unemployment insurance reform activity in the states
• Index of articles about unemployment insurance

Unemployment insurance
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See also: Reform proposals related to unemployment insurance and Unemployment insurance reform activity in the states

Refusal of work, in the context of unemployment insurance is a term that refers to an individual's refusal to accept an offer of suitable work while collecting unemployment insurance benefits.

State unemployment insurance programs require individuals to accept offers of suitable work unless, depending on the state, the individual can show good cause for refusal. Definitions of what constitutes suitable work and good cause vary by state. Individuals risk losing unemployment insurance benefits if they refuse suitable work.

In accordance with various state laws, failing to report a refusal of work and continuing to claim benefits might constitute unemployment insurance fraud and can be prosecuted.

Read about reform proposal activity in the states related to refusal of work here.

Background

A refusal of work occurs when an individual declines an offer of suitable work while collecting unemployment insurance benefits. Typically, states define suitable work as a job that corresponds to an individual's education level, work experience, and most recent wages. Suitable work can also depend on a state's definition of a reasonable commute.

Suitable work definitions may change after an individual receives unemployment insurance for a certain number of weeks. For example, New York defines suitable work for an individual's first 10 weeks on unemployment as "work that you can reasonably do through your past training and experience." After 10 weeks, individuals must accept any work they are able to do, even if they lack training or experience for the position. Any such job that pays at least 80% of the individual's highest-earning quarter during their base period qualifies as suitable work after the 10-week period if the commute is within one hour from an individual's residence by private transit or one and a half hours via public transit.

Penalties for misreporting refusal of work

See also: Unemployment insurance fraud

Failing to report a refusal of work and continuing to claim unemployment benefits after a refusal constitutes unemployment insurance fraud. State laws governing unemployment insurance may classify unemployment insurance fraud as either a misdemeanor or felony offense, depending on the extent of the fraud. Federal guidelines require states to assess a minimum penalty of 15% of the amount of the fraudulent claim, according to the U.S. Department of Labor. States generally prohibit individuals found guilty of committing unemployment insurance fraud from receiving future benefits for a minimum of six weeks for every week of fraudulent claims.

Criminal prosecution under unemployment insurance laws may result in the following penalties, depending on the state:

• Fines up to or exceeding $10,000, depending on the state.
• Incarceration.
• Probation in addition to, or in lieu of, incarceration.
• Repayment of fraudulent benefits.
• Forfeiture of future income tax refunds.
• Permanent loss of eligibility for unemployment insurance benefits.

Reform proposals related to unemployment insurance compensation

This section presents the main approaches to addressing challenges related to unemployment insurance fraud and unemployment insurance overpayments.

If you know of any reform proposals that are missing, email us.

Incentivize job search efforts and job acceptance

In his 2019 article "Optimal unemployment insurance with monitoring," economist Ofer Setty proposed that job search efforts and job acceptance among unemployment insurance benefits recipients could be incentivized through monitoring procedures, decreasing a worker's UI benefits the longer they are unemployed, and increasing the taxes unemployed individuals pay once they return to work.

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In optimal UI, a risk-neutral planner insures a risk-averse worker against unemployment by setting transfers during unemployment and a wage tax or a subsidy during employment. During unemployment, the worker searches for a job by exerting effort, the level of which is private information. Since the planner cannot observe the job-search effort, the constant benefits that are implied by the first-best allocation would undermine the worker's incentives to search for a job. Therefore, to solve the incentive-insurance trade-off, benefits should continuously decrease during unemployment, and the wage tax upon reemployment should continuously increase. I include monitoring in this framework as follows. The planner chooses the quality (precision) of the monitoring technology for the unemployed worker. The cost of monitoring increases with the monitoring's precision, which is correlated with the worker's job-search effort. The planner uses the monitoring signal to improve the efficiency of the contract by conditioning future payments and the wage tax not only on the employment outcome but also on the signal's outcome. These future payments create endogenous sanctions and rewards that, together with the monitoring signal, create effective job-search incentives. By exerting job-search effort, the worker increases the probability of a good signal and, consequently, of higher payments.

”

In their 2015 article "Unemployment Insurance Fraud and Optimal Monitoring," economists David L. Fuller, B. Ravikumar, and Yuzhe Zhang proposed that incentives to report new employment and disincentives to collect unemployment benefits while employed could reduce fraudulent claims. The authors proposed a constant period between verification checks for employment, tax incentives for individuals who promptly reported new employment between verification checks, and unemployment insurance benefits that decreased with the length of unemployment.

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The most prevalent incentive problem in the U.S. unemployment insurance system is that individuals collect unemployment benefits while being gainfully employed. We examine a model of optimal unemployment insurance where a worker can conceal his employment status and the Unemployment Insurance authority has a technology to verify his employment status. We find that the optimal interval between consecutive monitoring periods is a constant, independent of history. The optimal employment tax is nonmonotonic, increasing between verifications and decreasing immediately after a verification. The optimal unemployment benefits decline with unemployment duration with sharp declines after each verification.

”

Require employers to report work refusals

See also: Refusal of work

The Foundation for Government Accountability (FGA) published a 2020 paper titled "Reporting Employee Work Rejections," proposing that states require employers to report unemployed workers who refuse job offers.

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Individuals aren’t returning to work after being laid off, and are refusing new jobs as well. Instead, they continue to draw taxpayer-funded unemployment insurance benefits. Continuing to collect unemployment after refusing to work is fraud. ... States should set up simple, easy-to-use processes where employers can report employees who have refused an offer of suitable work.

”

Increase verification and reporting

The FGA published an article in 2021 titled "Top 10 Examples of Outrageous Unemployment Fraud in 2020—And How to Fix It." The article proposed that state agencies tasked with administering unemployment insurance programs could reduce unemployment insurance fraud by performing increased unemployment insurance verification checks against existing records and reporting their findings to state legislatures.

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One typical practice for state unemployment agencies is to cross-reference their claims against the state’s quarterly tax and wage reports, provided by employers. However, rather than simply once per quarter, states should be performing these checks every week, since unemployment claims themselves happen every week. Further, a cross-reference is only as good as the database it utilizes. Therefore, weekly checks should be made against three important databases: prison records, the National Directory of New Hires, and the NASWA Integrity Data Hub. These are pre-existing databases to which states should already have access. State legislatures should also require their workforce agencies to report back, at least once per year, about their implementation of and findings from these crosschecks, including overpayments detected and money saved.

”

In his 1997 article "Unemployment Insurance Fraud and Optimal Monitoring," U.S. Department of Labor economist Burman Skrable proposed that additional use and publication of unemployment insurance fraud recovery and identification techniques could deter fraudulent claims.

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Massive efforts to restructure the UI system's incentives are unlikely. Narrowly defined process improvements, at least to improve benefit payment administration, have had, overall, slight effects on payment accuracy. The most productive avenue remaining might thus be more, and more intelligent, detection and recovery efforts. Students of UI integrity have concluded that much evasive behavior is systematic, and thus liable to detection and deterrence by computerized profiling. They have urged this for increasing employer compliance with tax reporting laws and for screening claimants to focus scrutiny on those persons statistically more likely than average to violate various UI eligibility provisions (Blakemore et al. 1996; Burgess 1992; Burgess and Kingston 1987, p. 256). Such work could build on the profiling systems developed to identify laid-off individuals who are prone to need extensive reemployment assistance and implemented in the past two years. Benefits profiling could use the extensive BQC records. Employer profiling would require each state to mount one-time, if not continuing, random audit programs of employers as was done in Illinois. The targeted selections of workers would help SESAs focus enforcement efforts, information, and job search assistance on workers most likely to need them. Targeted employer audits would increase yield. Both should also provide more effective deterrence if the activity and results are publicized (Kingston, Burgess, and St. Louis 1986, p. 334; Blakemore et al. 1996, p. 22).

”

Require recovery of overpayments

See also: Unemployment insurance fraud recovery

The 2021 FGA paper "Top 10 Examples of Outrageous Unemployment Fraud in 2020—And How to Fix It" also proposed that state legislatures could require state workforce agencies to recover unemployment insurance overpayments and report any cases where recovery was not attempted or impossible.

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State lawmakers should also require state workforce agencies to recover all fraud and non-fraud overpayments. Further, state workforce agencies should be required to report and explain to state legislators and the public any cases where they fail or refuse to recover any overpayments, even for allowable reasons such as agency error. Fraud and overpayment recovery should not be optional, since the unemployment tax increases on small businesses that are caused by a leaky unemployment program are also nonoptional.

”

See also

• Unemployment insurance
• Unemployment insurance fraud
• Unemployment insurance fraud recovery
• Unemployment taxes
• Unemployment Trust Fund
• Unemployment filings during the coronavirus (COVID-19) pandemic, 2020-2021
• State government plans to end federal unemployment benefits related to the coronavirus (COVID-19) pandemic, 2021

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